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Caring Senior Service Franchise Blog

Employees or Business Owners: Who Really Makes More Money?

Posted by Thomas Scott on Jan 8, 2018 3:02:41 PM

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According to the book I recommend to anyone interesting in franchising, The Educated Franchisee, by Rick Bisio, one of the most common questions that people ask when they decide whether to go into business is why should they start a business when they can make more money as an employee.

Employee Salary

As an employee, you are paid immediately for the work that you do, and you may receive additional value, like a company car, club membership, and healthcare packages. The perks of being an employee sound great when contrasted with the hard work and countless hours that go into business ownership.

In the short term, the answer will always be the employee makes more money. As a business owner, you walk away from a comfortable salary and invest a sizable amount of your capital into a business. Losing access to that capital will have you making less money for the short-term future.

If you stop moving forward at this point, you are like the majority of people who start to investigate business ownership. You look at the immediate facts in front of you and draw a conclusion which makes staying an employee the safe and logical choice.

However, what if you are confronted by some facts contrary to the conclusion you reached? What if you have a conversation, read a news article, or see a social media post and learn about someone like you that has made the decision to become a business owner, and is now realizing success? You might start to questions your initial decision and beliefs.

Business Owner Benefits

If you are like many Americans and have only ever worked as a salaried employee in a corporate setting and have not been educated on the concept of ownership, you must examine the mentality of the business owner and look at why people own businesses. During the first year of your business, you will need investment capital and will likely make less than if you had stayed at your job as an employee.

However, business owners immediately receive other tax benefits like the ability to purchase large items like cars as business expenses and write off expenses such as child care. Many people don't realize that the government wants to stimulate the health of small businesses by offering significant tax advantages to small business owners.

By the second year of your business, your gross revenues will have improved, though you still might take home less than the corporate employee. As an owner, you will enjoy perks like being able to set up your own retirement program and direct more money to retirement that would have been possible in a corporate matching program. You would also have the freedom to choose your own health care plans instead of being forced to choose what an employer offers.

When you reach the third year as a business owner, you may still be making slightly less than the employee with average yearly raises. But as an entrepreneur, you have created asset value in your business! You now have the ability sell YOUR company at a profit if you wish or continue to grow your asset. In 3 years, you have increased your net worth significantly, while the employee continues to have low risk and a limited potential for future growth.

The shift from "salary mentality" of an employee to the "asset creation mentality" of the business owner can help you see how making sacrifices initially in your new endeavor can start you on the road to wealth creation. Only business owners have the ability to create something of value that can be passed along to the next generation.

If you can change the way you look at "how much do you make" and take on a certain amount of risk to work for yourself, you may be a good fit as a franchisee for Caring Senior Service. Your first step is scheduling a quick call to see if our franchise might be a good fit for your skills, goals, and competencies: Schedule My Call

Franchise vs Startup Promotion

Topics: Finances, Franchise Ownership

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